Peak Oil

Peak Oil Demand Is A Slow-Motion Train Wreck

19 Jan 2018   Peak Oil

The precise date at which oil demand hits a high point and then enters into decline has been the subject of much debate, and a topic that has attracted a lot of interest just in the last few years. Consumption levels in some parts of the world have already begun to stagnate, and more and more automakers have begun to ratchet up their plans for electric vehicles. But the exact date the world will hit peak demand kind of misses the whole point, argues a new report , which is notable since it is coauthored by BP’s chief economist Spencer Dale, along with Bassam Fattouh, the director of The Oxford Institute for Energy Studies. They argue that the focus shouldn’t be on the date at which oil demand peaks, but rather the fact that the peak is coming at all. “The significance of peak oil is that it signals […]

An Open letter to the School of Public Health, UQ, re: the looming net energy cliff

30 Dec 2017   Peak Oil

Open Letter To: Staff of the School of Public Health, Re: The looming Net Energy Cliff, Global Economic/Industrial collapse and Human Die-off “infinite consumption from a finite resource base is impossible” Dear Colleagues, I am a Cardiologist who convened the group “doctors and scientists for sustainability and social justice” in Brisbane from 2006 to 2013 www.d3sj.org . I am writing to your department in the virtually forlorn hope that a tiny handful of you may open your eyes to the most urgent public health issue we face, which will horrifically accelerate human suffering and die-off within a decade 1 . The effects are already being felt in many parts of the world, masquerading as global economic recession 2 or the collapse of certain Middle Eastern societies. This issue has been ignored, denied and dismissed for years by “endless growth” economists and other flat earthers, but denial does not make […]

What Happened to Peak Oil?

22 Dec 2017   Peak Oil

I was first introduced to the concept of “peak oil” 15 years ago. It was a simple theory: Oil is a finite resource. At some point in time, the world’s ability to increase oil production would ultimately “peak.” And this peak would be followed by a terminal decline in global output. The theory has been around for almost a century. But the man who popularized the idea was an American geophysicist named M. King Hubbert. In 1956 Mr. Hubbert presented a research report to the American Petroleum Institute that predicted oil production in the United States would peak in 1970. Turns out he was right. U.S. oil production peaked in 1970 at 9.6 million barrels per day. And production did decline afterwards. But Hubbert didn’t see one thing coming: hydraulic fracking. Hydraulic fracking and other enhanced oil recovery methods were successfully introduced in the new millennium, allowing U.S. oil […]

The myth of a fossil fuel phase-out

18 Dec 2017   Peak Oil, Renewables

How the world uses energy is a hot topic for a warming planet, and fears of pollution and resource strain have produced a virtual arms race of energy-efficiency strategies. From the European Union to China, economies are vowing to reduce their energy intensity with the help of technological innovations and legislative changes. Yet, despite these promises, consumer demand for energy is forecast by the International Energy Agency to rise until at least 2040. With the world’s energy needs growing, how can policymakers guarantee supply? To put it bluntly, the world has nothing to worry about when it comes to reserves. After 40 years of fearing energy shortages, we have entered an era of abundance. We need to guard against false narratives, not scarce resources. The culprit of this storyline is the Club of Rome, a global think-tank that, in the 1970s, spurred energy anxiety with its absurd prophecies derived […]

Oil demand: Beware the gap

Forget a peak – falling production from existing fields should be the market’s immediate focus Peak oil demand has swiftly moved from concept to potential to symbolic talisman— and it means different things to different people. Most often, the debate centres on the year when this peak may occur. Is it 2025? 2035? And these days the discussion never fails to mention electric vehicles, which—runs the argument—will eat away at oil’s market presence. But there are other significant things to worry about in the much shorter term. And for companies, this attempt to identify the year of the peak—and what will happen to the 20% or so share of the market that would be affected by transport electrification—is simply not granular enough to be of use. It also ignores what’s been going on in the market. Global oil-demand growth in 2017 is likely to come in at around 1.6m […]

Was 2017 The Year Of Peak Oil Demand?

22 Nov 2017   Peak Oil

It’s possible that 2017 may go down as the year when the concept of peak oil demand went from speculation to potential reality, as companies and energy analysts began estimating when demand growth for oil would begin to taper off. The debate over whether peak demand is coming has been fierce , but it’s possible that the inordinate focus on the potential plateau in global oil demand ignores more important, immediate concerns that will have a much bigger impact on prices. While the predictions of when peak demand may come vary quite considerably, they mostly point to levelling demand in the developing world due to slowing growth, stable or declining demand in the industrial world due to the widespread adoption of electric vehicles, and the replacement of oil by natural gas or renewable energy. New demand will come from petrochemicals, driving the need for light […]

The Oil Situation: Some Alarming Aspects.

21 Nov 2017   Oil Supply, Peak Oil

There are four or five factors indicating that the oil supply situation is likely to become extremely problematic within a decade. There is no recognition of this within the mainstream. Each of the themes is briefly summarised below, with documentation given in the appendix. Production of conventional oil seems to have peaked about a decade ago . A number of analysts think this is the case, so no documentation is given below. Oil supply has been kept up over the last decade by increasing supply of unconventional oil, e.g., from fracking. The amount of energy needed to provide each unit of oil energy (EROI) is increasing. It has more or less doubled in twenty years. This is because of increasing scarcity, difficulty of discovery and need to tap more difficult sources. The discovery rate has fallen dramatically, […]

The Soft Belly of The Oil Industry: the Upcoming Seneca Collapse

20 Nov 2017   Peak Oil

Ugo Bardi explains his idea of an impending “ Seneca Collapse ” of the world’s oil industry at the session on climate change of the meeting of the Club of Rome in Vienna, on 10 Nov 2017. What follows are not the exact words said, but it maintains the gist of this brief comment that was focused on the concept that the oil industry has a “soft belly” in the fact that it produces mainly fuel for engines used for transportation. If this market were reduced by the introduction of electric vehicles and other transportation innovations, the whole industry could collapse. That would be a good thing for the earth’s ecosystem and for humankind in general. Dear colleagues, we are having an interesting discussion on how to stop climate change and I think I could add some thoughts of mine on the basis of my recent work that I […]

6 Factors Will Hasten Or Defer Peak Oil Demand

13 Nov 2017   Peak Oil

We haven’t reached peak oil consumption globally, also known as peak demand. We are likely to reach it globally by 2050, but it’s unlikely to occur before 2030 at the very earliest. There are six major factors which make defining exactly when it will occur very difficult. I haven’t seen any modelled analysis (including my own projection related to electric cars ) which includes all six. When you see yet another prediction of peak demand or peak oil, use this as a handy cheat sheet to see how much weight to put upon the analysis. Peak Demand is Different than Peak Oil It’s important to separate the meaning of peak demand from the previously understood meaning of peak oil. That term, commonly referred to as Hubbert’s Peak , suggested that economically extractable oil reserves were finite and that the peak of what was globally economic to extract was going […]

“End Of Oil” Narratives Are Misleading

11 Nov 2017   Peak Oil

Over the next few decades we’ll be plugging in more cars, hailing and sharing them, and reminiscing about the good ol’ days of the steering wheel. To be sure, these looming mobility changes are all exciting and impactful. But none of these nascent trends extrapolate easily into a narrative about “the end of oil,” a disruptive displacement of the fuel everyone loves to hate. Contrary to armchair calculus, more electric vehicle (EV) sales do not equate to the world using less oil anytime soon. In fact, whichever way you cut the spreadsheets, the numbers are pointing in the opposite direction. By 2030, less than 15 years from now, I expect around 400 million more internal combustion engines will accumulate into the global fleet of passenger cars – even after assuming that EV market penetration is accelerated with the heavy-handed help of governments around the world. Here is an indication […]

Peak oil: What happens when the drilling is done?

11 Nov 2017   Peak Oil

A seismic shift It seems like we’ve been talking about “peak oil” for a long time, but the meaning has shifted radically in the last few years. Historically the phrase referred to the hypothetical point in time when the world’s oil production would hit its maximum. It became famous in the 1970s, when we feared there may not be enough black gold underground to fuel our cars and economies. Four decades later, the phrase is making a comeback—but it’s now about moving toward a solar-powered, electric car future that won’t require such vast amounts of fossil fuels. That transition could prevent catastrophic climate change, if it happens quickly enough, but it will also profoundly reshape the global economy. In essence, the topic has changed from geology—how long can we drill oil in a cost-effective way—to figuring out what happens to our economies when we don’t have to drill anymore. […]

OPEC Prepares For Peak Oil Demand In Late-2030s

8 Nov 2017   OPEC, Peak Oil

OPEC . The annual release of the bloc’s World Oil Outlook points out that if just a quarter of the world’s cars run fully on batteries, demand would plateau at 109 million barrels per day between 2035 and 2040. “It is highly unlikely that electric vehicles will penetrate the passenger car segment with this strength in less than 24 years,” according to the report published on Tuesday. “Nevertheless, several countries have publicly stated their intention to achieve an even higher share of electric vehicles in new sales.” In the United States and Canada, the adoption of ride-sharing apps and fuel-efficient cars should result in a seven percent demand drop by 2040 as well, continuing the trend in declining oil demand without the direct public sector push seen in parts of Asia and Europe. There has been a change in traction for EVs in just the past year or two, […]

Shell Gears Up For Peak Gasoline

Since the oil price plummet it 2014, Shell has transitioned its business model over to refining oil, offering other refined oil products, and producing petrochemicals. The oil giant will produce well beyond gasoline to serve other growing economic sectors, and to offset the role EVs will play by the 2030s. Rapid growth in the global economy, especially Asia, will grow demand for other refined oil products and petrochemicals. Asia will see new roads added, with demand creating economically viable substitutes for asphalt. Shell wants to be poised and ready to provide that supply. The oil giant will also be ready to provide the polymers and chemicals that go into plastics used in vehicles and many other products, said Shell’s head of manufacturing Lori Ryerkerk, who is in charge of refining. Shell will double the size of its chemical operations by the mid-2020s with several new plants coming to Louisiana […]

‘End of oil’ narratives are misleading — global oil demand will remain at 90 million bpd till at least 2040

6 Nov 2017   Peak Oil

Contrary to armchair calculus, more electric vehicle (EV) sales do not equate to the world using less oil anytime soon. This is the fourth and final in a series of columns exploring the potential impact of electric vehicles on oil consumption. The world isn’t reinventing the wheel. But we’re changing how it turns, who it carries and where it’s going. Over the next few decades we’ll be plugging in more cars, hailing and sharing them, and reminiscing about the good ol’ days of the steering wheel. To be sure, these looming mobility changes are all exciting and impactful. But none of these nascent trends extrapolate easily into a narrative about “the end of oil,” a disruptive displacement of the fuel everyone loves to hate. Contrary to armchair calculus, more electric vehicle (EV) sales do not equate to the world using less oil anytime soon. In fact, whichever way you […]

The Era Of Oil And Gas Is Nearing Its End

3 Nov 2017   Peak Oil

The history of crude oil and natural gas is a history of technological innovation. Until recently the innovation supported crude oil and natural gas. Now, it challenges it, causing structural changes in the crude oil and natural gas markets. Originally, crude oil was only used for lighting. This changed following the invention of the internal combustion engine, which outperformed steam engine in power, range and ease of operation and maintenance, and the invention of the conveyor belt, which made it possible to mass-produce the internal combustion engine at a price which was affordable to the masses. Not much later, crude oil became the transportation fuel of choice. The horse drawn carriage was replaced by the car; the locomotive by the diesel train; the steamship by the motor vessel; and the zeppelin by the airplane. For a long time, natural gas was an unwanted by-product from crude oil production, and […]

Aramco CEO Warns Of Imminent Oil Supply Crunch

As much as US$1 trillion of investments has either been deferred or canceled with the lower-for-longer oil prices, and this underinvestment will impact the future of energy, Amin Nasser, the chief executive of Saudi Aramco, said on Tuesday. “Not much investments have been going into the energy sector… $1 trillion has been either deferred or cancelled,” Nasser said at the Future Investment Initiative conference in Riyadh. Of the US$1 trillion investment, US$300 billion was earmarked for oil exploration and another US$700 billion for project developments, according to the CEO of the state-held oil giant of OPEC’s biggest exporter and de facto leader Saudi Arabia. “This will have an impact on the future of energy if nothing happens,” Nasser noted, adding that investments are necessary because of “natural depreciation of fields and normal rise in demand.” “We are witnessing a transformation… But it will be decades before renewable energy takes […]

Norway Unfazed By Peak Oil Concerns

24 Oct 2017   Norway, Peak Oil

When crude oil demand will peak is anyone’s guess. Forecasts vary widely. Wood Mackenzie says that peak demand is “very real,” and sees a decline of 4 million bpd between 2020 and 2035. Other majors including BP and Total SA see peak demand as coming between 2025 and 2040, as a result of clean energy government initiatives, slower economic growth, and wider use of electric vehicles. Not everyone is that concerned with peak oil demand, however. Recently, Norway’s Energy Minister said the biggest problem for Europe’s largest oil and gas producer is satisfying near-term demand, which is growing faster than Norwegian continental shelf operators are making discoveries. It might sound a bit weird that Europe’s greenest country is still so big on oil and gas, but in reality, there’s nothing weird: Oil and gas exports account for a substantial portion of Norway’s export revenues, with their value for 2016 […]

Big Oil To Bet On Petrochemicals As Demand Peak Looms

18 Oct 2017   Peak Oil

Remember that “This Ain’t Your Daddy’s Oil” commercial that blew up on Twitter at this year’s Super Bowl? It was about crude oil being used for things other than fuels—useful, sometimes indispensable things. Like it or not, this is what the future holds for the industry, according to a new report from Wood Mackenzie. The energy consultancy expects that petrochemicals will turn into the top driver for demand growth in crude oil in the long run as fuels lose their top spot. It’s actually demand for petrochemicals that will keep global oil demand growing until about 2035, Wood Mac says, adding that this growth, however, will slow to a crawl by that year. In places like Europe, Japan, the United States, and even China, crude oil consumption will plateau by 2035, while in India, some other Asian states, Africa, Latin America, and the Middle East, it will continue to […]

Oil demand likely to peak by 2030

18 Oct 2017   Peak Oil

As electric vehicles are to increase their popularity, particularly beyond 2025, the world petrol demand is to peak within 13 years, says a report by UK-based analysis firm Wood Mackenzie. The analysis estimates that the demand for oil in developed countries will reduce by about four million barrels per day by 2035. But, on the other hand, the developing economies will increase their demand for oil by nearly 16 million barrels per day by 2035. Currently 60 million out of the 96 million barrels of oil consumed globally every day is used in transport. But this is to decline from 2030, according to the analysis. Factors such as development of more fuel efficient vehicles, climate change policies, maturing of developing economies, and restrictions such as fuel efficiency and pollution standards imposed by governments are the other reasons for the decline in the demand. OECD oil demand reverts to structural […]

Why 2017 will go down as the beginning of the end of the internal combustion engine

12 Oct 2017   Peak Oil

General Motors outlined an all-electric path to zero emissions with at least 20 new all-electric vehicles by 2023. Electric vehicles no longer seem like a futuristic fever dream, but they remain a rarity on most American city streets, accounting for less than 1 percent of the nation’s auto sales, according to the automotive website Edmunds.com. Yet, when future auto historians look back, they may pinpoint 2017 as the year electric vehicles went from a promising progressive fad to an industry-wide inevitability. The tipping point, experts say, follows three developments, each rippling outward with economic and cultural consequences. China’s flexing: In addition to setting aggressive production quotas for EVs, China plans to scrap internal combustion engines entirely as soon as 2030. By taking a lead role in the shift to plug-ins, the world’s largest auto market is forcing the rest of the international community to follow in its footsteps. The […]

Oil: We still need (plenty) more supply

12 Oct 2017   Peak Oil

Analysts at HSBC suggest that despite a likely peak in LDV demand in 2025-30, the peak in total oil demand still looks much further off and they see a looming shortage of supply as a more pressing issue, pointing to upside in prices from current levels. Key Quotes “The rate of climate policy progress and technological advances in alternative transport means the outlook for global oil demand has become subject to an unusually high level of uncertainty.” “Our model indicates that on most scenarios, a combination of higher Electric Vehicle (EV) sales and improving fuel efficiency in the internal combustion engine (ICE) fleet leads to a peak in light duty vehicle (LDV) demand for oil in the period 2025-30, albeit with limited demand erosion before 2030 or so due to the scale of the existing LDV fleet.” “Total oil demand has the potential to continue growing for much longer, […]

China Study Warns Of Impending Oil Production Peak & World Oil Market Squeeze, + Peak Recoverable Coal ~2020

9 Oct 2017   China, Peak Oil

China is rapidly approaching peak fossil fuel extraction according to a new state-funded study led by the China University of Petroleum in Beijing. The study findings include the assertion that China will experience a peak in its total oil production (conventional + unconventional) by as early as 2018. As a result, world oil markets and geopolitics are likely to be greatly affected as China seeks to meet the widening demand shortfall through trade. Accompanying this reality, China will also be reaching peak commercially recoverable coal around 2020, according to the study. The study notes, though, that even though coal currently accounts for around 66% of China’s total energy consumption, a shift away from the resource has been underway in recent years, and that if this shift is accelerated, then demand may fall fast enough that peak coal may not occur there. For more on that, see: China Halts Construction […]

World’s Biggest Oil Trader Questions Its Own Fate

7 Oct 2017   Peak Oil

Vitol’s chief executive, Ian Taylor, said he expected the shift to electric vehicles and non-fossil fuel sources of energy to shrink the oil industry. Speaking at an event in London, the executive said crude oil demand could peak some time around 2028-2030. Vitol is responsible for the trade of around 7 percent of global oil, which makes it the biggest oil trading firm in the world. Taylor admitted he is concerned about the company’s place in a new, less oil-dependent, world. An additional cause for worry is the shrinking pool of talent, as more young people opt for a career in technology, he said. A third cause for worry for one of the world’s top oil traders is the low price of the commodity, although Taylor said that he expected prices to improve to about US$60-65 in the next two to three years. Before that, however, Taylor said , […]

It’s Been A Tough Week For Peak Oil Theorists

29 Sep 2017   Peak Oil

In news that is certain to upset adherents to the never-dying cult of Peak Oil, IHS Markit released a study on Sept. 25 indicating that, per their analysis of data from more than 440,000 oil wells in the Permian Basin, the basin still has somewhere between 60 and 70 billion barrels of producible oil to give up in coming years. That’s not exactly the “ near-infinite resource ” view of the Permian held by Allen Gilmer and his staff at DrillingInfo, but it certainly supports the notion that the basin will remain a very active area for oil and gas development for decades to come. “The Permian Basin is America’s super basin in terms of its oil and gas production history, and for operators, it presents a significant variety of stacked targets that are profitable at today’s oil prices,” Prithiraj Chungkham, director of unconventional resources for IHS, said in […]

Riding The Energy Transition – Oil Beyond 2040

26 Sep 2017   Peak Oil

The motor vehicle was very quick to replace horses in the early 20th century, and the advent of the electric car suggests that another profound shift in transportation and energy could be around the corner. This column projects how different rates of electric car adoption will effect oil demand and consumption over the next three decades. In a fast-adoption scenario, oil prices could converge to the level of current coal prices by the early 2040s. Even under a slow adoption scenario, oil could become obsolete before it is depleted. The imminent demise of oil as the world’s main energy source has been widely heralded since at least the 1950s, most famously by M King Hubbert in his ‘peak oil’ hypothesis (Hubbert 1956). Progress in oil extraction and continuing discoveries of new reserves, however, have brought this idea into question. In fact, as noted by Sheikh Zaki Yamani, a former […]

Beyond peak oil

19 Sep 2017   Peak Oil

The last decade has seen a significant change in the terms of the debate around the concept of “peak oil”. Ten years ago the focus was on when oil resources would start to run out and was still based on a concept developed in the 1950s by a Shell geophysicist called M King Hubbert. Hubbert saw in the life story of an individual oil field, which rises to maximum production and then usually rapidly declines, a model that could be applied to the industry as a whole. As a finite resource, global oil would inevitably reach a point where the only prospect was decline. Numerous worthy individuals and companies believed they could identify the peak. The US Energy Department has produced an invaluable list of those predictions. In 1972, Exxon said the peak would come around the year 2000. In 1977 with typical precision Hubbert himself put it at […]

Shell’s defence of big oil is too hopeful

13 Sep 2017   Peak Oil

Royal Dutch Shell, looking deeply into its crystal ball, sees a future that’s still heavily dependent on oil. The Anglo-Dutch giant expects crude will continue to play a major role in global energy supply for decades, even in its less oil-friendly scenario. That optimism goes someway to justifying the billions of dollars it continues to invest in exploiting new reserves and expanding its fuel network. But it’s also a view that may place too much faith in the combustion engine – and China staying with its current strategy. Despite growing evidence that the oil era is grinding to an ugly and disruptive halt, Shell remains optimistic. On Sept. 8, the company updated its two core strategic models – labeled Mountains and Oceans – which both come to similar conclusions about the future of crude and liquid hydrocarbon fuels. Although peak demand will happen sometime after 2030, and governments will […]

The Obsolescence of Oil As We Live Out the Current Technology Wave

9 Sep 2017   Peak Oil

With every new green announcement on the global technology stage we get propelled further into a reality where oil may no longer be dominant. Whether its France and India committing to phase out gas powered cars, Tesla’s quest to revolutionize the global perception of renewable energy cars or the increasing rate at which many of the earth’s inhabitants are being displaced from their habitat, the moral, health, economic and ecological arguments seem to be gaining traction after decades at the fringes. The importance of oil may endure the same fate that coal did at the turn of the 21st century. While it’s arguable that oil still has a role to play in the markets for a long time coming, when countries such as India (Nigeria’s largest oil patron) set policies to cut oil receipts by half by 2030, then it explicitly highlights the energy direction of these countries in […]

Peak oil demand in 2022

6 Sep 2017   Peak Oil

Energy demand will plateau after 2030, according to a new DNV GL (stand 5B51) model which forecasts the pace and extent of the global energy transition until 2050. While fossil fuel will still provide more than 40% Peak of the world energy demand, the consequences of the decarbonization of the energy mix and of the flattening out of energy demand are substantial, it says. DNV GL’s new Energy Transition Outlook forecasts peak global demand for oil in 2022, and peak gas in 2035, the same year in which total global energy demand is predicted to reach its highest point before flattening, thanks to step-changes in energy efficiency. Although the oil and gas industry is predicted to continue to be an important contributor to the energy transition, there needs to be development towards enhanced efficiency with reduced costs, wastage, and use of resources in all elements, says DNV GL. “Increased […]

Peak Oil Is Not The Same As Peak Demand

24 Aug 2017   Peak Oil

Following my previous article — Peak Demand? No, A New Gasoline Demand Record — I received some interesting feedback from readers. It quickly became apparent that some didn’t understand that the current discussions around “peak oil demand” are quite different than the “peak oil” arguments that were popular a few years ago. Some interpreted my headline to mean that peak oil is a myth and that oil supplies will simply continue to grow. Actually, I was addressing the irrational exuberance around the near-term peak oil demand argument, which is something entirely different. So, let’s review. Almost from the beginning of the U.S. oil industry, there have been those who suggested that it wouldn’t be long before oil production began to inevitably decline. The layman’s understanding of “peak oil” typically boiled down to “The world is running out of oil.” But that was a misunderstanding of the actual peak oil […]

A Contrarian View On The Peak Oil Debate

24 Aug 2017   Peak Oil

Summary Because peak oil demand theory has become self-evident truth, it is hard to even suggest at this point that the theory might be wrong, even when backed by solid evidence. Conventional oil production only increased by about 1.5 mb/d over the past decade. Discovery as well as current reserves data suggest a peak and decline will occur within the next decade. Expectations of unconventional oil sources making up for any loss in conventional production and making up for yearly demand growth are highly misplaced. A combination of two major trending stories from the past few years provided for a very powerful one-two punch against the whole peak oil supply theory. On the supply side, we have the U.S. shale revolution, which brought an additional 5 mb/d on the global market since 2008. On the demand side, we have had increasing speculation in regard to EVs killing oil demand […]

Running For The Exits: Peak Oil Demand

21 Aug 2017   Peak Oil

A terminal price decline in oil is inevitable. Trends in EV cost, ICE efficiency, and driverless cars will cripple oil demand. The price decline we have seen with coal — a commodity that continues to see minor demand growth — will pale in comparison to the price drop coming for oil. Investors should liquidate their connection to oil producers before the end of the current decade. A little over a year ago, I put my thoughts together on why I think we will reach peak oil demand soon — and the effects that will have on commodity prices. A Terminal Decline Peak oil supply or demand has long been a topic of discussion in commodities. In the past year, we have seen new information and a continuation of existing trends that have removed any doubts from my mind. Investing in oil companies today would only be a smart […]

Why Would Oil Demand Peak, Contrary to Peak Oil Supply?

18 Aug 2017   Peak Oil

People find it hard to believe that there is another side of the ‘Peak Oil Supply’ theory, which is ‘Peak Oil Demand’. The oil industry is quite familiar with the concept of a “Peak Oil Supply” but people find it hard to believe that there is another side of the theory, which is “Peak Oil Demand”. This article will examine why the concept of peak oil supply failed to materialize and why one should believe the concept of peak oil demand will materialize. Peak Oil Supply Theory Going back in history, the term “peak oil” was originally coined in the 1950s by M. King Hubbert who predicted that the US oil production would peak in 1970, and decline at the same rate as it arose. But in the history of the petroleum era, Matt Simmons will be remembered for calling attention to peak oil. In reality, whenever oil prices […]

Peak Oil And Peak Demand Have Entirely Different Outcomes

16 Aug 2017   Peak Oil

Following my previous article — Peak Demand? No, A New Gasoline Demand Record — I received some interesting feedback from readers. It quickly became apparent that some didn’t understand that the current discussions around “peak oil demand” are quite different than the “peak oil” arguments that were popular a few years ago. Some interpreted my headline to mean that peak oil is a myth and that oil supplies will simply continue to grow. Actually, I was addressing the irrational exuberance around the near-term peak oil demand argument, which is something entirely different. So let’s review. Almost from the beginning of the U.S. oil industry, there have been those who suggested that it wouldn’t be long before oil production began to inevitably decline. The layman’s understanding of “peak oil” typically boiled down to “The world is running out of oil.” But that was a misunderstanding of the actual peak oil […]

A future of cheap oil

14 Aug 2017   Peak Oil

An ongoing price slump is rattling the industry and weakening petrostates. How will low prices change the world? Here’s everything you need to know: How cheap is oil? Prices have hovered between $40 and $50 a barrel for the past year — far below the pre-collapse high of $147 a barrel in 2008. The U.S. shale revolution continues to cause a global glut in supplies of the liquid fossil fuel, depressing the price, and energy company Shell says it is bracing for a world where oil prices might stay “forever low.” Oil prices have historically been highly volatile, and demand for the commodity is higher than ever. But if the glut continues, it will pose an existential threat to the monarchy ruling Saudi Arabia, which relies on oil for as much as 70 percent of the kingdom’s income. Other petrostates, including Venezuela and Russia, are already in a state […]

The Reported Death of Peak Oil Has Been Greatly Exaggerated

3 Aug 2017   Peak Oil

Production for May by BOEM was 1673 kbpd and by EIA 1661, compared with 1661 and 1658 kbpd, respectively in April. March looks like the peak, at least near term, for the basin, especially with Hurricane Cindy impacting the coming June figures. The combined new fields added from late 2014 look to be peaking as well. Great White came back on line but xxx and yyy declined. In previous data I had omitted one big producing lease in Mars, which included the new Deimos field. With this added the production growth through 2017 is higher (and as shown later the decline in mature fields faster) than previously shown. There may be more increase to come: the Mars leases had three rigs operating through June, one dedicated for Deimos, which has now gone. The two platforms on the field each have a dedicated […]

Remember Peak Oil? Demand May Top Out Before Supply Does

12 Jul 2017   Peak Oil

When Bob Dudley, chief executive officer of British oil giant BP Plc, was asked at a recent conference when oil demand will peak, he had a precise answer: June 2, 2042.  The audience at the annual St. Petersburg International Economic Forum burst into laughter, knowing it’s impossible to predict such an event down to the day. But the American executive wasn’t speaking entirely in jest: The most recent edition of BP’s widely scrutinized Energy Outlook has global demand for crude maxing out in 2½ decades, give or take a year. That projection casts a shadow over one of the world’s largest industries, which until recently was far more concerned with boosting supply. The advent of electric cars, the fight against climate change, and slowing economic growth in China is dampening the world’s once boundless appetite for crude. Carmaker Volvo AB announced on July 5 that it will manufacture only electric or hybrid models from 2019 onward. Three days later, France said it would ban sales of cars with diesel and gasoline engines starting in 2040.

Patrick Pouyanne, CEO of Total SA, says demand will peak at some point in the 2040s, which is why the French energy giant he runs has been investing in solar power. Ben van Beurden, CEO of Royal Dutch Shell Plc, has said the zenith could arrive a lot sooner, in the next 15 years or so, if electric cars became really popular. “The energy transition is unstoppable,” Van Beurden told the St. Petersburg forum in early June. “In the most aggressive scenario, you can see oil already peaking in late 2020s or early 2030s.” In the time scale of the oil industry, where multibillion-dollar projects often take a decade or longer to come to fruition, that’s as close as it gets to saying “the day after tomorrow.”  If such forecasts prove right, oil prices are likely to remain low for a lot longer. That raises the possibility that some hard-to-reach deposits, like those in the Arctic, may never be tapped, turning what today are considered valuable reserves into assets of questionable worth. That worries big institutional investors such as BlackRock Inc. that manage mutual funds composed of energy stocks.

Oil companies may still adapt by diversifying into petrochemicals, for which demand is expected to keep climbing, and renewables such as solar, wind, and biofuels. Natural gas demand will also continue to grow, which is good news for companies like Exxon Mobil Corp. and Shell that have invested heavily in liquefied natural gas for export.  For Middle East nations that sit on huge hydrocarbon reserves, peak demand is more of an existential threat. “If you have 100 years’ worth of oil reserves, then 25 years looks like a very short time frame,” says Martijn Rats, a Morgan Stanley oil analyst in London. Saudi Arabia and Kuwait depend on oil for as much as 90 percent of their income. They and other Middle East nations have used their oil wealth to provide their populations with well-paid employment in the public sector and generous handouts—a tacit social contract underpinning their absolute petromonarchies.  The current bout of low prices offers clues about how these countries would handle a permanent drop-off in demand. With oil revenues sharply down, Middle East producers are dipping into their foreign exchange reserves—Saudi Arabia has drawn almost $250 billion since mid-2014. They’re also borrowing more. The combined public debt of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates is set to jump to almost $800 billion by 2020, more than double its 2015 level, according to the International Institute of Finance, a group representing large banks. The situation is direst in such places as Nigeria and Venezuela, where corruption and mismanagement have drained state coffers.

Oil Fields Pumping a Third of Supply Die Fastest in 24 Years

11 Jul 2017   Oil Supply, Peak Oil

The tussle for supremacy between OPEC and U.S. shale drillers is killing off older oil fields at the fastest pace in almost a quarter century. That could hurt the industry once the current glut has faded.  The three-year price slump triggered by the battle for market share choked off funds for aging deposits elsewhere, accelerating their decline. Output at older fields from China to North America — making up a third of world supply — fell 5.7 percent last year, the most since 1992, according to Rystad Energy AS. It’ll drop about 6 percent in 2017 if oil stays at current prices, the consultant said.  Oil fell from above $100 a barrel in 2014 to as low as $26 in 2016 as the Organization of Petroleum Exporting Countries opened the taps in an effort to stem the surge in shale production. That set off the worst industry downturn in a generation, forcing cost-cutting companies to focus on higher-margin assets at the expense of older, costlier fields. While OPEC changed course last year and curbed output to boost prices, shale was the main beneficiary and resurgent U.S. output has kept crude below $50.  “A lot of the focus is on OPEC and shale and not on the decline at these mature fields, where supply is struggling,” said Espen Erlingsen, a partner at Oslo-based Rystad. “We’re starting to see the long-term impact of lower oil prices.” Though new projects mean total global production continues to rise, the slide at aging fields may give OPEC a helping hand by reducing surplus supply today, according to Erlingsen. The danger for major oil companies — many of which are gathering in Istanbul this week for the World Petroleum Congress — is that the decline may be difficult to reverse, increasing the risk of future supply shortfalls as spending cuts take their toll for years to come.  “About $1 trillion in investments has been lost in the current downturn,” Saudi Aramco Chief Executive Officer Amin Nasser said Monday at the congress. “Conservative estimates suggest we need about 20 million additional barrels a day over the next five years.”

Fields in Decline

Oil deposits go through a number of phases, with production initially rising before flattening out and eventually waning as the reservoir pressure drops. About a third of global output comes from mature conventional fields — about 30 million barrels a day, or around three times Saudi Arabia’s supply — according to Erlingsen. Their fast-declining supply “is making OPEC’s life a little easier,” he said.

 

The World Keeps Not Running Out of Oil

10 Jul 2017   Peak Oil

The world has anticipated the “rapid exhaustion” of crude oil supplies for at least 100 years.Will it go on being close to running out of crude for the next 100? “Peak Oil” — the idea that global oil production will soon reach a maximum and then begin to decline — attracted a significant number of believers in the 1990s and early 2000s. Then unconventionals happened. Unconventional resource production blossomed in the United States. With rising crude production, the U.S. stopped soaking up the world’s excess oil supply. Instead of cutting back crude production to balance the market, Saudi Arabia increased production to protect its market share. And ta-da! — we got a global glut of crude and liquids, along with a truly major price collapse. Today, you are more likely to hear people talk about a possible worldwide peak in oil demand rather than a peak in oil production. […]

Fossil Fuel Empire: A World of Vulnerability

7 Jul 2017   Peak Oil

“It’s all about the oil,” many commentators said about the US assault on Iraq in 2003. Attributing a war to a single cause is almost always an oversimplification, but protecting access to the 20th century’s most important energy source has been a priority of US foreign policy since World War II. In part one of this series we considered the effects of the US military complex which has ringed the world for the past 75 years. This complex has depended on vast amounts of fossil fuel energy to move troops and munitions, and the US became a world power in significant part because of its endowment of oil. As Daniel Yergin recounts in The Prize: The Epic Quest for Oil, Money & Power Petroleum was central to the course and outcome of World War II in both the Far East and Europe. The Japanese attacked Pearl Harbor to protect […]

Fossil Fuel Empire: A World of Vulnerability

6 Jul 2017   Peak Oil

“It’s all about the oil,” many commentators said about the US assault on Iraq in 2003. Attributing a war to a single cause is almost always an oversimplification, but protecting access to the 20th century’s most important energy source has been a priority of US foreign policy since World War II. In part one of this series we considered the effects of the US military complex which has ringed the world for the past 75 years. This complex has depended on vast amounts of fossil fuel energy to move troops and munitions, and the US became a world power in significant part because of its endowment of oil. As Daniel Yergin recounts in The Prize: The Epic Quest for Oil, Money & Power Petroleum was central to the course and outcome of World War II in both the Far East and Europe. The Japanese attacked Pearl Harbor to protect […]

Brace for a devastating oil shock ahead

4 Jul 2017   Economy, Peak Oil

If Independence Day were about feting the U.S. weaning itself from foreign oil and forging a renewables future, the man behind our call of the day probably wouldn’t be sounding the alarm on a potentially devastating crisis by the end of the decade. But it’s not. And we aren’t. And he is. Yes, according to the latest warning from Chris Martenson of the Peak Prosperity blog, there’s an oil shock looming as early as 2018. Not just any oil shock, either. The impact of this particularly nasty spike will be severe and long-lasting, he believes. “There will be an extremely painful oil supply shortfall sometime between 2018 and 2020,” he explains. “It’ll be highly disruptive to our over-leveraged global financial system, given how saddled it is with record debts and unfunded IOUs.” Martenson said there is a way to avoid it — but that’s only if the world economy […]

The “Peak Oil” Pig Returns With A New Shade Of Lipstick

29 Jun 2017   Peak Oil

Proponents of a new strain of the always-tiresome, never-correct “Peak Oil” theory have returned to the public discourse , this time with a new theory coming from the other side of the crude oil supply/demand equation. Prior iterations of “Peak Oil” theory – which noted author Daniel Yergin traces all the way back to the 1880s, when alarmists claimed that oil would never be discovered anywhere west of the Mississippi River (Texas, Oklahoma, North Dakota, Louisiana, Wyoming, Colorado, Utah, New Mexico, Montana, Kansas, California and Alaska beg to differ) – have always focused on supply. According to “Peak Oil” theorists down through the decades, oil production has constantly been at or near its “peak”, and the end of the age of oil is always […]

Oil Industry To Waste Trillions As Peak Demand Looms

26 Jun 2017   Peak Oil

A new report from The Carbon Tracker Initiative analyzed what would happen if the oil market saw demand peak by 2025, a scenario that would be compatible with limiting global warming to just 2 degrees Celsius. The headline conclusion is that about one-third of the global oil industry’s potential spending – or about $2.3 trillion – would not be needed. In other words, the oil industry is on track to waste a massive pile of money if demand peaks in less than ten years. Of course, the vulnerability to peak demand varies by company. Carbon Tracker surveyed 69 global oil and gas companies, and their exposures range from 10 to 60 percent of their potential spending. That is, 10 to 60 percent of their spending could be unnecessary or wasteful if demand peaks by the middle of the next decade. The latest report adds more detail to the “stranded […]

The World Is Millions Of Barrels Away From Peak Oil

26 Jun 2017   Peak Oil

The notion that demand for crude oil will soon peak has largely replaced the idea from a decade ago that crude oil production was about to peak for geological reasons. This new idea is that we will no longer need oil (or at least a lot less of it) because consumers will choose alternatives to oil. But actual oil consumption numbers suggest that peak demand for oil won’t happen soon, and when it does happen it will do so at a demand millions of barrels per day (BPD) higher than current demand. Proponents of peak demand expect that exponential growth in electric vehicles (EVs), and to a lesser extent an increase in biofuel production will send oil demand into permanent decline. In fact, nearly a year and a half ago Bloomberg suggested that at a continued annual growth rate of 60%, electric vehicles could displace two million BPD of […]

Using Energy to Extract Energy – the Dynamics of Depletion

24 Jun 2017   Peak Oil

The “Limits to Growth Study” of 1972 was deeply controversial and criticised by many economists. Over 40 years later, it seems remarkably prophetic and on track in its predictions. The crucial concept of Energy Return on Energy Invested is explained and the flaws in neoclassical reasoning which EROI highlights. The continued functioning of the energy system is a “hub interdependency” that has become essential to the management of the increasing complexity of our society. The energy input into the UK economy is about 50 to 70 times as great as what the labour force could generate if working full time only with the power of their muscles, fuelled up with food. It is fossil fuels, rfined to be used in vehicles and motors or converted into electricity that have created power inputs that makes possible the multiple round- about arrangements in a high complex economy. The other “hub interdependency” […]

Falling Interest Rates Have Postponed “Peak Oil”

13 Jun 2017   Peak Oil

Falling interest rates have huge power. My background is as an actuary, so I am very much aware of the great power of interest rates. But a lot of people are not aware of this power, including, I suspect, some of the people making today’s decisions to raise interest rates. Similar people want to sell securities now being held by the Federal Reserve and by other central banks. This would further ramp up interest rates. With high interest rates, practically nothing that is bought using credit is affordable. This is frightening. Another group of people who don’t understand the power of interest rates is the group of people who put together the Peak Oil story. In my opinion, the story of finite resources, including oil, is true. But the way the problem manifests itself is quite different from what Peak Oilers have imagined because the economy is far more […]

Peak Oil Demand Is A Risk – Why Nobody Knows If Or When

1 Jun 2017   Peak Oil

The lead story in a recent The Wall Street Journal Report on Innovations In Energy was titled “Get Ready for Peak Oil Demand.” We have been getting ready for the past couple of years. However, in dealing with such a critical issue overhanging the future of this important global industry, the unanswered question is when will oil demand peak and begin to decline. To answer the question one needs to know when those forces reducing oil consumption will become meaningful. Then, one has to know how much the demand will be reduced. The assumptions underlying some of the most pessimistic forecasts for oil consumption treat demand-altering forces as switch-like – once thrown, oil use goes from light to dark, hot to cold, or rising to collapsing. It has a nearly immediate impact. However, it may be more appropriate to view the transition from expanding energy use to shrinking consumption […]

This Is What the Demise of Oil Looks Like

31 May 2017   Peak Oil

From giant companies like Exxon Mobil Corp. to OPEC members such as Saudi Arabia, oil producers say their industry will enjoy decades of growth as they feed the energy needs of the world’s expanding middle classes. But what if they’re wrong? There’s a host of reasons to think they might be. Here’s what happens when you test their central assumptions. The International Energy Agency sees oil demand rising more than 10 percent, to 103.5 million barrels a day by 2040, while companies predict even faster growth. But forecasters don’t always anticipate seismic shifts in technology and policy that could slow demand growth, or even eliminate it altogether in some parts of the economy. Even small changes could add up. Advances in vehicle efficiency, a rise in electric cars, tighter emissions standards and shifts to other fuel sources would result in oil demand much lower than the industry is banking […]

Get Ready for Peak Oil Demand

29 May 2017   Peak Oil

The world’s largest oil companies are girding for the biggest shift in energy consumption since the Industrial Revolution: After decades of growth, global demand for oil is poised to peak and fall in the coming years. New technologies that improve fuel efficiency are starting to push down the amount of gasoline and diesel that’s needed for transportation, and a consensus is growing that fuel demand for passenger cars could fall as carbon rules go into effect, electric vehicles gain traction and the internal combustion engine gets re-engineered to be dramatically more efficient. Western countries’ growth used to move in lockstep with their energy consumption, but that phenomenon is starting to decouple in advanced economies. While most big oil companies foresee a day when the world will need less crude, timing when that peak in oil demand will materialize is one of the hottest flashpoints for controversy within the industry. […]